Changes to state pension scheme will see privates pay an extra £162 in
National Insurance contributions every year.

Almost 200,000 members of the Armed Forces will have to pay hundreds of pounds more in National Insurance contributions under the Government's pension reforms, figures have disclosed.

A private soldier earning £17,000 a year will have to pay an extra £162 in National Insurance contributions, while a sergeant on £30,000 will have to pay £341 more a year, research by the House of Commons library has found.

The higher charges result from the Government's plan to abolish the state second pension, along with the current rebate on National Insurance for individuals who contract out of the second pension. Members of the Armed Forces pension scheme are among those with occupational pensions who are entitled to the rebate.

But once the second state pension ceases to exist they will have to pay full National Insurance. "This will mean an increase in the rate of contributions that they pay equivalent to 1.4 per cent of their earnings," according to the Government's own report.

"This is either incompetent or inconsiderate," said the shadow defence secretary, Jim Murphy. "Ministers are hurting those who protect our country overseas."

The abolition of contracting out is also expected to accelerate the closure of final salary schemes in the private sector. However, members of these "gold-plated" pension schemes are likely to get a better state pension after the new "single-tier" payment is introduced than they could have expected under the existing rules.

An MoD spokesman stressed that the increase in National Insurance contributions came about as a result of changes to the state pension, not the Armed Forces scheme itself. He added: "A new Armed Forces pension scheme will be introduced in 2015. The new scheme, unlike [those for] most other government employees, will continue to be a non-contributory scheme.

"The Government has also protected the accrued rights of those on the existing Armed Forces pension schemes and there will be no change to the age at which those currently serving can expect to draw those accrued rights."

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